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The cryptocurrency landscape of Saudi Arabia is unique due to government initiatives exploring the boundaries of blockchain technology, a very cautious regulatory stance toward cryptocurrencies, and a slowly growing base of interested investors. This article discusses some of the main features of this emerging market.
The Saudi Arabian government is contemplating how it might leverage the potential of blockchain. Its Public Investment Fund has taken two ways to ensure this.
The PIF Managers Gate Platform: Digital platform— from October 2023—for cooperation between PIF and external fund managers in fostering investments, possibly those related to cryptocurrency and blockchain.
Wealth Fund Sanabil: The venture arm of PIF commits $2 billion every year to back different kinds of innovative businesses. It said, in April 2023, that it had invested in venture capital firms invested in cryptocurrency and blockchain operators.
The Saudi Central Bank (SAMA) is also proceeding with caution. In June 2020, SAMA commenced use of blockchain technology in its operations, opened a regulatory sandbox for new smart digital banking services, and blockchain-based education programs. Furthermore, in 2019, SAMA and the Central Bank of the United Arab Emirates jointly undertook Project Aber to assess the possibilities of using a central bank digital currency.
Despite these efforts, the regulatory framework concerning cryptocurrencies is still very apprehensive. The Saudi Central Bank and Ministry of Finance have warned against cryptocurrency transactions due to lack of legal status, anonymity in operation outside the regulatory framework, and high volatility. Suspicions about their possible use in illegitimate activities only add to this position.
This legal ambiguity makes life difficult for investors, who are very sensitive about setting their feet in crypto-trading activities for fear of legal actions being taken against them. But NFTs offer some level of security because they are out of that blanket ban on cryptos.
There are several active regulatory bodies involved in the investigations for crypto solutions, such as:
Saudi Arabian Financial Authority, SAFA
Saudi Arabian Monetary Agency, SAMA
Ministry of Communications and Information Technology, MCIT
Capital Markets Authority, CMA
BSV Blockchain Association
The land of the Saudi Arabian market has seen several investments related to cryptocurrency and blockchain technology:
Hashgraph Association Partnership- February 2024: Five years deal of $250 million revolves around the creation of innovation in the investment sector of Saudi Arabia using blockchain technology.
Sanabil Indirect Investments, April 2023: Sanabil invested in venture capital firms Haun Ventures and Blockchain Capital known for their cryptocurrency portfolios.
Talos joins Blockchain Association, November 2022: Affirms Talos to its regulatory compliance in the digital asset space.
Saudi Digital Academy - BSV Blockchain Association partnership,
February 2022: Created a brand new blockchain academy that centers its studies on the BSV blockchain.
The legal environment for cryptocurrencies has not yet taken shape, though there are a number of firms very active now in the larger digital asset and blockchain space :
Domestic/ Regional Players: JMM Innovations, Invactor, YalaCoins, ArabianChain Technology, NIFTY Souq, OQOD, e-procure
Global Players : Exness
The cryptocurrency market in Saudi Arabia is expected to reach US$65 million in 2028 from US$38 million in 2023 at a CAGR of 11.88%. More people and institutions across Saudi Arabia are adopting cryptocurrencies for various uses, including investment, trading, and remittances.
